The Toll of a New Machine

The intersection of Interstate 4 and Florida's Highway 27 is a well-known spot, the point where the clutter of Orlando's theme parks exhausts itself and the old Florida of citrus groves and sandy ridges picks up.

There is a McDonald's at this intersection, and in a booth on a recent Friday, Don Vaughn is having lunch with his daughter-in-law and granddaughter. They've driven 12 miles to this McDonald's, drawn by the power of a dawning technology.

"It's fantastic," says Vaughn, a local. "I love it. It's the new age."

"We tell [the machine] the way we want it," says Chrystal, Vaughn's daughter-in-law, "and we know it's done right." Done right, in Chrystal's case, means no onions.

The liberating new-age technology in use right there inside the McDonald's--a pair of kiosks bolted to the floor near the front counter--allows customers to use a touch screen to order their Big Macs and Happy Meals exactly the way they want them. Vaughn, Chrystal, and Heather drove to this particular McDonald's--as they do regularly--just to order their food on the touch screens themselves.

In the tumult of lunchtime at a busy McDonald's, and in the tumult of the U.S. economy, the slim, silver machines would be easy to overlook, though each is as tall as a person and sports a colorful screen. There are just 85 of them, installed in 48 franchised restaurants, all without the help of McDonald's itself.

The company quietly putting self-ordering computers in McDonald's is Kinetics Inc., whose self-service technology has already swept through the airline industry, with results that have amazed executives and customers alike. Every day, hundreds of thousands of airline customers check themselves in, cheerfully doing work that used to be done by thousands of airline ticket agents. Kinetics' self-service vision could have the same impact on the fast-food business as it has had on airlines--and fast food and airlines are just the start. Besides checking ourselves in for flights at the airport, we may soon be checking out rental cars at our destinations without talking to anyone, and then checking into hotels at a lobby kiosk that, first, displays a diagram of all the rooms available and then, after we choose one, pops out a room key.

If you look at the dozens of Kinetics self-service machines lined up at Delta's terminal in Atlanta, or Northwest's in Minneapolis, or Continental's in Houston, you'll begin to understand the role they're already having in a powerful economic trend: the ability of U.S. businesses to do more and more with the same, or fewer, workers. Labor productivity grew at an astounding annual rate of 9.5% during the third quarter of last year, the largest quarterly leap since 1983. That's an unsustainable pace (and it dropped to a more typical 2.6% in the fourth quarter), but it is part of a steady trend that has productivity increasing in the past two years at more than twice the historical pace. Crudely put, the numbers mean the work that required 100 people in 2000 requires just 89 people today.

Kinetics and its kiosks are capitalizing on this productivity trend and driving it. The company, which makes about two-thirds of the nation's airport self-check-in machines, is an all-but-unknown Lake Mary, Florida, outfit. Although Kinetics does everything itself--from designing and manufacturing its own machines, to servicing them in the field--it is tiny. Last year, tens of millions of airline customers checked themselves in on machines that were designed, produced, and supported by just 67 employees.

It's unlikely that such machines will mean the end of ticket agents and rental-car clerks. Instead, those jobs will change--and there may eventually be more of them.

But the impact of Kinetics and its kiosks isn't as obvious or as scary as the sensationalist headline those numbers might suggest--"67-Person Company Puts Thousands of Airline Employees Out of Work!" True, airlines have been shedding jobs in the past few years, but that's largely due to industry woes that have nothing to do with automation. And it's unlikely that these machines will mean the end of ticket agents, rental-car clerks, or the front-desk staff at hotels. Instead, those jobs will change--and eventually, there may be more of them, not fewer, because of self-service. That seems counterintuitive, but employment has actually grown in other service businesses that have been automated. At the dawn of the self-service banking age in 1985, for example, the United States had 60,000 automated teller machines and 485,000 bank tellers. In 2002, the United States had 352,000 ATMs--and 527,000 bank tellers. ATMs notwithstanding, banks do a lot more than they used to and have a lot more branches than they used to.